Bill Wilson’s recent post, Illusory Coverage: A Legal or an Ethical Issue? noted that March is Ethics Awareness Month for the insurance industry. In a prior post from two years ago, March is Ethics Awareness Month in the Insurance Industry, Bill Wilson raised the following three issues:

March is Ethics Awareness Month
Gallup recently released it’s annual Honesty/Ethics in Professions poll. The good news? The category “insurance salespeople” is not in last place. The bad news? The only “professions” that finished worse were car salespeople and members of Congress.

Insurance as a Profession
Ask this question among your staff or others in the industry that you deal with: Is insurance a profession? Is an insurance agent, broker, underwriter, adjuster, consultant, etc. a professional? How do we view ourselves?

Ethics: The Adjuster Says it’s Covered Though the Agent Knows It Isn’t
Adjusters in two different claims have said that a claim is covered and are prepared to cut checks, but the agent in each claim knows the adjuster has overlooked a relevant exclusion. What should the agents do? What would legendary claims detective, Ace Insura, do?

My responses to the three points are as follows:

  1. The industry should do more to promote the complex nature of insurance and the vital role it plays for everybody rather than advertising how cheap insurance can be and making fun of losses.
  2. The industry should treat these jobs as professions and demand stricter licensing, education and Codes Of Ethics which those who do not follow are held accountable.
  3. Two wrongs never make a right. Yet, the answer is usually one of ethical duty to whom. These are why Codes of Ethics are important. What are you ethically obligated to do?

While researching for this post, I came across a paper, What’s Up With Ethics Awareness Month?, which must have been written in 2005. It stated in part:

When insurance companies or producers, or other companies with a “trust factor” in our culture, break that trust, negative publicity is extensive. Not only does the media coverage reflect on the company’s bottom line directly in sales, it can also raise the levels of fraud among insureds: “If that company can act like that, then I’m justified in filing a fraudulent claim!” One way of helping protect the integrity of your company is to keep ethics in the forefront with your employees.

I also came across an article from the Columbus Chapter of the CPCU Society, Ethics Awareness Month: March, 2018 Contest. The article intrigued me because over the years, Merlin Law Group has had several Nationwide Insurance Company claims practices cases where we have raised a number of ethical adjustment issues. Yet, I have never heard of the person highlighted in the article nor his office. The article noted:

Our Chapter commemorated Ethics Awareness Month by seeking out one of the foremost local experts in the field, LeRoy Johnston III, CPCU. LeRoy is the Nationwide Insurance Chief Ethics Officer. He leads a team responsible for investigating reports of internal misconduct or fraud and for responding to questions of an ethical nature raised by associates. His office also publishes the company’s Code of Conduct. His team provide ethics training both live and virtually.

LeRoy mentioned when given a hypothetical situation, a very high percentage of people will choose the right answer 100% of the time. However, when it becomes biased due to personal affliction (i.e. job interview questions become non-HR appropriate) but is overlooked because the person needs a job/money to pay bills. That is when things get a bit dicey.

The last paragraph proves a point in many of our wrongful claims practice cases. We assert that insurance companies that tie claims payments to the profitability goals of the company, rather than fully and promptly paying what is owed, are often encouraging their employees to deny or underpay claims. There seems to be a lot more concern about goals of “claims leakage” than underpaying or delaying a customer’s claim when reviewing most insurance company claims goals.

Thought For The Day

It was one of those March days when the sun shines hot and the wind blows cold: when it is summer in the light, and winter in the shade.
—Charles Dickens